Developed as a companion to the Red Brand Canners (RBC) case, the starting point in this case is the improvement in performance resulting from the optimization approach in the original case. However, RBC’s vice president of operations is concerned about the quality and quantity mix of the most recent tomato crop received from Greenfield Farms (GF). RBC’s preferred quality and quantity mixes differ significantly from the current harvest. To RBC, the issue is how to motivate the supplier to produce a crop more in line with RBC’s needs. Initially, both firms in the B2B section of the supply chain try to find a combination that would be mutually beneficial — an attempt that fails because of conflicts of interest. RBC’s objective might be accomplished by taking a supply chain approach and modifying the delivery contract by an appropriate pricing scheme. The task is to identify and calibrate a pricing scheme that will realize the supply chain’s maximum performance and lead to a stable win-win solution. The derivation of the supply chain optimal prices is carried out by developing and solving a linear optimization model.

Learning Objective:

The case discussion can be initiated from the perspective of RBC or GF. Given existing conflicts of interest, the case can be used to introduce a more global perspective and thus to foster supply chain thinking. Supply chain coordination will be achieved by determining supply chain optimal prices in the B2B section. While the quantitative analysis to support optimal pricing is a critical part of the learning experience, the case can also be used by presenting the optimal prices and having the participants discuss their implications. The case is intended for use in operations management, management science, marketing, or general management courses.